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Methodological Developments for the Estimation of Own-account Software Investment in the UK

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  • Josh Martin

Abstract

Own-account software (OAS) investment is the investment in software assets in-house for use within the firm: an increasingly important form of intangible investment. I consider methodological developments for UK estimates of OAS investment. First, I estimate OAS investment using the quarterly Labour Force Survey (LFS), following the method used by the Office for National Statistics (ONS) almost exactly, which uses the Annual Survey of Hours and Earnings as its main data source. This produces the first genuinely quarterly estimates of OAS investment, which enable a better understanding of recent trends in the economy than existing estimates. These quarterly estimates suggest considerably stronger growth during 2020 and 2021 than in official estimates, with implications for other National Accounts variables. In constructing these figures, I also develop time factors for Standard Occupation Classification (SOC) 2020 codes for the first time. Second, I consider other improvements in measurement, including an approach that combines ASHE and LFS data, improved calculation of sales adjustment factors, and treatment of the self-employed.

Suggested Citation

  • Josh Martin, 2022. "Methodological Developments for the Estimation of Own-account Software Investment in the UK," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2022-25, Economic Statistics Centre of Excellence (ESCoE).
    • Handle: RePEc:nsr:escoed:escoe-dp-2022-25
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    References listed on IDEAS

    as
    1. Josh Martin & Cain Baybutt, 2022. "The 'F Words': Why Surveying Businesses About Intangibles is so Hard," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2022-20, Economic Statistics Centre of Excellence (ESCoE).
    2. Carol Corrado & John Haltiwanger & Daniel Sichel, 2005. "Introduction to "Measuring Capital in the New Economy"," NBER Chapters, in: Measuring Capital in the New Economy, pages 1-10, National Bureau of Economic Research, Inc.
    3. Nicholas Bloom & Steven J. Davis & Yulia Zhestkova, 2021. "COVID-19 Shifted Patent Applications toward Technologies That Support Working from Home," AEA Papers and Proceedings, American Economic Association, vol. 111, pages 263-266, May.
    4. Martin, Josh, 2019. "Measuring the Other Half: New Measures of Intangible Investment from the ONS," National Institute Economic Review, National Institute of Economic and Social Research, vol. 249, pages 17-29, August.
    5. Graeme Chamberlin & Tony Clayton & Shikeb Farooqui, 2007. "New measures of UK private sector software investment," Economic & Labour Market Review, Palgrave Macmillan;Office for National Statistics, vol. 1(5), pages 17-28, May.
    6. Carol Corrado & John Haltiwanger & Daniel Sichel, 2005. "Measuring Capital in the New Economy," NBER Books, National Bureau of Economic Research, Inc, number corr05-1, August.
    7. Goodridge, PR & Haskel, J, 2015. "How much is UK business investing in big data?," Working Papers 25159, Imperial College, London, Imperial College Business School.
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    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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